Perceptions Drive Inequity in Claims for Unemployment Insurance

New research finds that workers with the least education and minorities apply for and receive unemployment insurance benefits at lower rates than others due largely in part to perceived ineligibility.

A recent working paper from the National Poverty Center at the University of Michigan by Alix Gould-Werth and H. Luke Shaefer examines separately the effect of educational attainment and race/ethnicity on UI participation and receipt rates using the 2005 Current Population Survey. It finds that high school graduates are less likely to apply for and receive unemployment benefits than college graduates.

This disparity holds across race and ethnicity, with one exception - African Americans who lost their jobs are less likely to apply for and receive UI benefits than white workers but equally likely to apply (and more likely to receive them) if they left of their own accord. Unemployed Hispanic workers are even less likely to apply and receive benefits than African-American and white workers, a distinction that holds regardless of citizenship status.

The study indicates that the primary reason for not applying for UI benefits is the perception of ineligibility. This view is more frequent among workers with less than a high school diploma than among their college-educated counterparts. Most workers who believed that they were ineligible thought that they did not work or earn enough to receive benefits, although most workers actually do meet financial eligibility criteria for UI. In addition Hispanic workers, regardless of educational level or citizenship, are more likely than other workers to be unaware UI benefits exist.

These results confirm a similar trend analyzed a decade ago: in 2000 a U.S. General Accounting Office study found that low-wage workers had lower UI application and receipt rates. This continuing disparity points to the need for states to increase efforts to promote unemployment benefits and provide information about eligibility among workers who have lower participation rates. Workers who belong to minority groups, have low-wage jobs or have less than a high school diploma are disproportionately impacted by economic downturns, and they are more likely to lose their jobs and need income support during such periods.

Unemployment benefits are an important bulwark for workers who become unemployed. The Census Bureau estimates that in 2010, UI benefits kept 3.2 million people out of poverty. It is critical that states not only extend their UI benefits, but also ensure that all eligible workers receive them. Furthermore, states must abstain from benefit cuts and eligibility changes that disproportionately hurt these disadvantaged groups, as well as workers who are transitioning into the workforce.